Atari - Lazard

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EX99.C.3 3 e60672a1exv99wcw3.htm EX99(C)(3): LAZARD FRERES SAS PRESENTATION Exhibit (c)(3) CONFI DENTI AL 0 2 MARCH2 0 0 8 P ROJ E CT GAME Di scussi onMat er i al sRegar di n g Ar ma d i l o

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Transcript of Atari - Lazard

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 1/30

    EX99.C.33e60672a1exv99wcw3.htmEX99(C)(3):LAZARDFRERESSASPRESENTATION

    Exhibit(c)(3)

    CONF IDENTIAL 0 2 MARCH2 0 0 8 P ROJ ECT GAME Dis c u s s io n Ma te ria ls Re g a rd in g Arma d illo

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    P ROJ ECT TATOOCONF IDENTIAL Dis c la ime ro T h is d o c u me n t(th e Do c u me n t )h a s b e e n p re p a re d b y L a z a rd F r re s ( La z a rd )a n d s o le ly a s a b a s is fo rd is c u s s io n o fth e fe a s ib ility o fc e rta in p o te n tia ltra n s a c tio n s me n tio n e d h e re in .Th e Do c u me n tis fo rth e e x c lu s iv e u s e a n d b e n e fito fits in te n d e d re c ip ie n ts a n d its c o n te n ts s h a llb e k e p ts tric tly c o n fid e n tia la n d n o tb e d is c lo s e d to a n y p e rs o n o th e rth a n its in te n d e d re c ip ie n ts o T h e Do c u me n th a s b e e n p re p a re d b y L a z a rd o n th e b a s is o fin fo rma tio n a n d fo re c a s ts in th e p u b lic d o ma in .Itre fle c ts p re v a ilin g c o n d itio n s a n d o u rv ie ws a s o fth is d a te ,a llo fwh ic h a re s u b je c tto c h a n g e .No n e o fth e in fo rma tio n o n wh ic h th e Do c u me n tis b a s e d h a s b e e n in d e p e n d e n tly v e rifie d n o ra u d ite d b y L a z a rd .In p re p a rin g th is p re s e n ta tio n ,L a z a rd h a s re lie d u p o n a n d a s s u me d th e a c c u ra c y a n d c o mp le te n e s s o fa llth e in fo rma tio n a v a ila b le fro mp u b lic s o u rc e s o Ne ith e rL a z a rd n o ra n y o fits re s p e c tiv e s h a re h o ld e rs ,d ire c to rs ,o ffic e rs o re mp lo y e e s ma k e s a n y wa rra n ty o rre p re s e n ta tio n ,e x p re s s e d o rimp lie d ,c o n c e rn in gth e a c c u ra c y o rc o mp le te n e s s o f,a n d n o n e o fth e ms h a llh a v e a n y lia b ility with re s p e c tto ,e ith e rth e in fo rma tio n o rth e a n a ly s e s o fin fo rma tio n c o n ta in e d h e re in o T h is p re s e n ta tio n is in c o mp le te with o u tre fe re n c e to ,a n d s h o u ld b e v ie we d s o le ly in c o n ju n c tio n with ,a n o ra lb rie fin g p ro v id e d b y L a z a rd .Ne ith e rth is p re s e n ta tio n n o ra n y o fits c o n te n ts ma y b e u s e d fo ra n y o th e rp u rp o s e with o u tth e p rio rwritte n c o n s e n to fL a z a rd 1

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    P ROJ ECT TATOOCONF IDENTIAL Ex e c u tiv e S u mma ry o T h e p u rp o s e o fth is d o c u me n t,b a s e d o n c u rre n ta v a ila b le in fo rma tio n ,is to p ro v id e T a to o with a p re limin a ry a s s e s s me n to fth e o ffe rp ric e th a tc o u ld b e o ffe re d to Arma d illo s min o rity s h a re h o ld e rs ,s h o u ld th is o p tio n b e re ta in e d b y T a to o s Bo a rd o fDire c to rs o Va rio u s v a lu a tio n me th o d o lo g ie s c o u ld th e o re tic a lly b e u s e d b u tg iv e n th e s p e c ific s itu a tio n o fArma d illo (Re c o v e ry )a n d d u e to th e a b s e n c e o fre c e n tb u s in e s s p la n o rb ro k e rs p ro je c tio n s ,we h a v e b a s e d o u ra n a ly s is o n two NAVa p p ro a c h e s ,tra d in g c o mp a ra b le mu ltip le s a n d b u y o u to ffe rp re mia o b s e rv e d in th e US o Th e s e v a lu a tio n me th o d s g iv e imp lie d v a lu e ra n g e we llb e lo wth e c u rre n ttra d in g le v e lo fArma d illo .Ma in re a s o n s wh ic h c o u ld e x p la in th e c u rre n tma rk e tv a lu e o fArma d illo ,in c lu d e :o S p e c u la tio n o n a p o s s ib le b u y o u to L a c k o fliq u id ity o Mis u n d e rs ta n d in g o fArma d illo s a c tiv ity a n d a s s e ts (d is trib u tio n v s .p u b lis h in g )a n d fin a n c ia lc o n d itio n (d e fa u lto n c u rre n tlo a n )o Imp lic itv a lu a tio n o fNOLs b y th e ma rk e t

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    P ROJ ECT TATOOCONF IDENTIAL Ta b le o fCo n te n ts IL IS T INGCOMP LIANCE IIP REL IMINARYVALUATIONMATERIALS IIIKEYLEGAL ANDTAXIS S UES TOBE CLEAREDINORDERTOAS S ES S THE ARMADILLOS ITUATION

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    P ROJ ECT TATOOCONF IDENTIAL IL is tin g Co mp lia n c e

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    P ROJ ECT TATOOCONF IDENTIAL L is tin g c o mp lia n c e o T h e ma rk e tv a lu e o fArma d illo s p u b lic ly h e ld s h a re s h a s b e e n c o n tin u o u s ly b e lo w$ 1 5 M(th e Na s d a q lis tin g c o mp lia n c e le v e l)s in c e 0 5 1 1 2 0 0 7 o T h e c o mp a n y h a s a limite d p e rio d u n tilMa rc h 2 0 ,2 0 0 8 to re g a in c o mp lia n c e ,o th e rwis e Arma d illo willb e d e lis te d o Atc u rre n ts h a re h o ld in g s tru c tu re ,th e min imu ms h a re p ric e le v e lto e n s u re a $ 1 5 Mflo a tv a lu e is $ 2 .4 /s h a re 3 .5 1 ,4 0 0 ($ )(x 1 0 0 0 s h a re s )3 .0 1 ,2 0 0 As h a re p ric e le v e la t$ 2 .4 (i.e ma rk e tc a p ita liz a tio n o f$ 3 2 M)2 .5 wo u ld e n s u re a $ 1 5 Mv a lu e fo rArma d illo s fre e flo a t1 ,0 0 0 Re ma in in g p e rio d :2 .0 0 3 0 3 0 8 to 2 0 0 3 0 8 8 0 0 $ 1 .6 7 Ata ris h a re p ric e ($ )%v s .s p o t1 .5 6 0 0 S p o ta s o f2 9 0 2 0 8 1 .6 7 Av e ra g e 1 mo n th 1 .4 7 (1 2 %)1 .0 Av e ra g e 3 mo n th s 1 .4 2 (1 5 %)4 0 0 Av e ra g e 6 mo n th s 1 .8 8 1 3 %Av e ra g e 1 y e a r2 .5 5 5 3 %Ma x 1 y e a r5 .1 4 2 0 8 %0 .5 Min 1 y e a r0 .9 8 (4 1 %)2 0 0 Au g 0 7 Oc t0 7 No v 0 7 De c 0 7 J a n 0 8 F e b 0 8 Ma r0 8 Vo lu me (x 1 0 0 0 s h a re s )Ata riIn c ($ )L is tin g c o mp lia n c e le v e l($ )

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    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 7/30

    P ROJ ECT TATOOCONF IDENTIAL IIP re limin a ry v a lu a tio n ma te ria ls AVALUATIONMETHODOLOGYBNET AS S ET VALUE ANALYS IS CCOMPARABLE TRADINGMULTIP LES DMINORIT IES BUYOUT TRANSACTIONS INTHE US

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 8/30

    P ROJ ECT TATOOCONF IDENTIAL Va lu a tio n Me th o d o lo g y o T h e me th o d re ta in e d to v a lu e Arma d illo min o rity in te re s ts a re :o Ne ta s s e tv a lu e with a re d u c e d NOLs b a s is Th is a p p ro a c h re fle c ts th e s itu a tio n o fa p o te n tia lb u y e rfo llo win g a tra n s a c tio n wh ic h willtrig g e rth e a p p lic a tio n o fth e s e c tio n 3 8 2 o fth e In te rn a lRe v e n u e Co d e o Ne ta s s e tv a lu e with fu llb a s is o fNOLs Th is a p p ro a c h a s s u me s e ith e rn o c h a n g e o fc o n tro la s p e rru le 3 8 2 o ra p o te n tia ls tru c tu re wh ic h willmitig a te th e imp a c to fru le 3 8 2 Th is a s s u mp tio n is th e o re tic a lin th e c u rre n ts itu a tio n to th e e x te n tth a tn o c le a rp a th h a s b e e n id e n tifie d to a llo wTa to o to p re s e rv e th e fu llNOLs p o s ttra n s a c tio n o T ra d in g c o mp a ra b le mu ltip le s S in c e Arma d illo a n d its p e e rs a re lo s s ma k in g ,th is a p p ro a c h is limite d to EV/Re v e n u e s mu ltip le s No s p e c ific v a lu a tio n is a ttrib u te d to c u rre n tNOLs in th is a p p ro a c h o T h e a b o v e me th o d o lo g y e x c lu d e s c o n tro lp re miu ma s T a to o a lre a d y c o n tro lc .5 2 %o fArma d illo s h a re c a p ita l.F o rb e n c h ma rk p u rp o s e s ,th e b u y o u tp re miu ms fo rth e ta k e p riv a te tra n s a c tio n s in th e US a re a ls o s h o wn

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 9/30

    P ROJ ECT TATOOCONF IDENTIAL Va lu a tio n Me th o d o lo g y (Co n td )o T h e fo llo win g a p p ro a c h e s h a v e n o tb e e n re ta in e d a tth a ts ta g e :o L iq u id a tio n v a lu e Th is me th o d h a s n o tb e e n re ta in e d s in c e th e ta k e p riv a te tra n s a c tio n wo u ld h a v e fo rma in p u rp o s e to a llo wTa to o to p u rs u e its o p e ra tio n s in th e US Th is me th o d wo u ld in a lllik e lih o o d re s u ltin lo we rv a lu a tio n th a n th e NAVa p p ro a c h o Dis c o u n te d c a s h flo ws (DCF )a n a ly s is Th is me th o d h a s n o tb e e n re ta in e d s in c e th e re is n o re c e n tb u s in e s s p la n o fArma d illo a v a ila b le to u s a n d d u e to th e h ig h ris k s o fth e re c o v e ry p la n ,a n y v a lu e wo u ld b e e x tre me ly s e n s itiv e to th e h ig h d is c o u n tra te re ta in e d a n d th e te rmin a lv a lu e (th e two ma in c o n tra c ts o fth e c o mp a n y a re p o te n tia lly te rmin a te d with in fe wy e a rs )o Co mp a ra b le tra n s a c tio n mu ltip le s Th is me th o d h a s n o tb e e n re ta in e d d u e to th e a b s e n c e o fre c e n ttra n s a c tio n s o n a s s e ts with a s imila rb u s in e s s p ro file th a n Arma d illo

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    P ROJ ECT TATOOCONF IDENTIAL Va lu a tio n S u mma ry EQUITYVALUE ($ /S HARE)COMMENTS Av e ra g e 1 mo n th :$ 1 .4 7 /s h a re S p o ta s o f2 9 0 2 0 8 :$ 1 .6 7 /s h a re o T a x a s s e ts v a lu e d b e twe e n $ 0 5 MNAVS ig n ific a n tlo s s o f$ 0 .5 0 /s h a re $ 0 .1 2 /s h a re o NOLs s ig n ific a n tly limite d d u e to NOLs o wn e rs h ip c h a n g e (u n d e rS e c tio n 3 8 2 o fth e In te rn a lRe v e n u e Co d e )o T a x a s s e ts v a lu e d b e twe e n $ 1 0 1 5 M,o n $ 0 .2 5 /s $ 0 .6 2 /s h a re a g o in g c o n c e rn b a s is NAVGo in g c o n c e rn b a s is 8 5 %6 3 %o F u llv a lu e o fNOLs (n o c h a n g e o fc o n tro lu n d e rth e ta x re g u la tio n )o Va lu a tio n b a s e d o n EV/Re v e n u e s 0 7 0 8 E $ 0 .4 5 /s h a re $ 0 .5 9 /s h a re mu ltip le s (0 9 E mu ltip le s le a d in g to n o n Co mp a ra b le tra d in g 7 3 %6 4 %me a n in g fu lv a lu e s )Mu ltip le s o EV/EBITDAa n d EV/EBIT le a d to n o n me a n in g fu lv a lu e s $ 1 .6 7 /s h a re $ 2 .1 5 /s h a re o P re miu ms o n min o rity b u y o u tin th e US :An a ly s is o fUS p re miu ms 0 %2 9 %0 2 9 %(1 .0 )(0 .5 )0 .5 1 .0 1 .5 2 .0 2 .5 3 .0 ($ /s h a re )No te :p re miu ms a re o n s p o tp ric e a s o f2 9 0 2 0 8 ,i.e $ 1 .6 7 /s h a re o Va lu a tio n o fArma d illo s e q u ity th ro u g h c o mp a ra b le USp re miu ms o n min o rity b u y o u to u tlin e s a v a lu e ra n g e o f$ 1 .7 2 .2 /s h a re o NAVa n a ly s is o n a g o in g c o n c e rn b a s is o u tlin e s o Av a lu e ra n g e o f$ 0 .3 0 .6 /s h a re ,b a s e d o n re c o v e ry o fth e NOLs o An e g a tiv e v a lu e ifNOLs a re lo s to T h e c o mp a ra b le tra d in g mu ltip le s a p p ro a c h o u tlin e s a s ig n ific a n td is c o u n to v e rArma d illo s c u rre n ts h a re p ric e 9

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 11/30

    P ROJ ECT TATOOCONF IDENTIAL IIP re limin a ry v a lu a tio n ma te ria ls AVALUATIONMETHODOLOGYBNET AS S ET VALUE ANALYS IS CCOMPARABLE TRADINGMULTIP LES DMINORIT IES BUYOUT TRANSACTIONS INTHE US

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 12/30

    P ROJ ECT TATOOCONF IDENTIAL Ne tAs s e tVa lu e An a ly s is As s e ts Ba la n c e Va lu e /S h e e tRe e v a lu a te d De p re c ia tio n Ata riIn $ millio n s (3 1 1 2 0 7 )a s s e ts ra te Va lu e s h a re (1 )Co mme n ts Ca s h 5 .4 0 %5 .4 0 .4 Ac c o u n ts re c e iv a b le 1 6 .2 0 %1 6 .2 1 .2 As s u mp tio n s to b e c o n firme d In v e n to rie s ,n e t7 .4 0 %7 .4 0 .5 Du e fro mre la te d p a rtie s 0 .4 0 %0 .4 0 .0 Allrig h ts o n TDUh a v e To ta lP re p a id e x p e n s e s a n d o th e rc u rre n ta s s e ts 5 .6 0 %5 .6 0 .4 b e e n tra n s fe rre d to T a to o To ta lc u rre n ta s s e ts 3 4 .9 3 4 .9 2 .6 a g a in s ta n u p fro n tp a y me n tP ro p e rty a n d Eq u ip me n t,n e to fd e p re c ia tio n 6 .3 0 %6 .3 0 .5 P e tty e q u ip me n t,with v e ry lo wma rk e tv a lu e o f$ 5 M.No ro y a lty s tre a mTo ta ln o n c u rre n tta n g ib le a s s e ts 6 .3 6 .3 0 .5 e x p e c te d .Re s id u a lv a lu e b e y o n d 6 y e a rs h a s b e e n T e s tDriv e 0 %6 y e a rs lic e n s e d e a la n n o u n c e d with IF Gn e g le c te d To ta lAn n ih ila tio n 0 .5 n .m1 .0 0 .1 0 .5 M5 a s p e rP wC,2 M5 a s p e rIF Ge s tima te s De e rHu n te r1 .0 n .m1 .9 0 .1 As p e rre c e n to ffe rp ro p o s e d fo rth e a c q u is itio n o fDe e rHu n te rAllo th e rs 0 .3 0 %0 .3 0 .0 As p e rP wCTo ta lv a lu e o fo wn e d IP s 1 .7 3 .2 0 .2 Go d z illa 2 .5 0 %2 .50 .2 As p e rIF Ge s tima te s Co o k in g 0 .4 0 %0 .4 0 .0 As p e rP wCEa rth wo rm0 .1 0 %0 .1 0 .0 As p e rP wCJ e n g a 0 .3 0 %0 .3 0 .0 As p e rP wCTo ta lv a lu e o fin d e v e lo p me n tIP s 3 .3 3 .3 0 .2 Ata rib ra n d lic e n c e (No rth Ame ric a ,u n til2 0 1 3 )2 .8 0 %2 .8 0 .2 As p e rP wCTa to o d is trib u tio n a g re e me n t8 .1 0 %8 .1 0 .6 As p e rIF Ge s tima te s To ta lin ta n g ib le a s s e ts 2 .2 1 7 .3 1 .3 T a x d e fe rre d a s s e ts 1 1 .5 0 %1 1 .5 0 .8 Aro u n d 2 M$ a n n u a lta x e c o n o my ,s e e a p p e n d ix fo rd e ta ils To ta la s s e ts 4 3 .5 7 0 .0 5 .2 o Ba s e d o n T a to o e s tima te s ,ta x d e fe rre d a s s e ts a re v a lu e d a t$ 1 1 M,u n d e rth e a s s u mp tio n th a tfo llo win g a fu llin te g ra tio n in to T a to o ,Arma d illo c o u ld b e a p ro fita b le e n tity with a n a n n u a lp ro fitb e fo re ta x o f$ 6 M(d e ta ile d v a lu a tio n in Ap p e n d ix )in 2 0 1 0 E .Th is a s s u mp tio n is n o ta c c u ra te fo ra s ta n d a lo n e v a lu a tio n o T a to o d is trib u tio n a g re e me n tis v a lu e d a t$ 8 M,u n d e rth e a s s u mp tio n th a titwillg e n e ra te $ 8 0 Ma n n u a lre v e n u e a n d $ 2 .9 Mfre e c a s h flo ws in 2 0 0 8 (d e ta ile d v a lu a tio n in Ap p e n d ix )

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 13/30

    P ROJ ECT TATOOCONF IDENTIAL Ne tAs s e tVa lu e An a ly s is (Co n td )L ia b ilitie s Ba la n c e Va lu e /S h e e tAta riIn $ millio n s (3 1 1 2 0 7 )s h a re (1 )VALUE P ERS HARE ($ /S HARE)To ta la s s e ts (re v is e d v a lu e )7 0 .0 5 .2 De fe rre d ta x a s s e ts v a lu e ($ M)0 .4 5 1 0 1 1 1 5 2 0 Ac c o u n ts p a y a b le 1 0 .6 0 .8 To ta lAc c ru e d lia b ilitie s 9 .3 0 .7 5 .0 (0 .4 )0 .0 0 .1 0 .4 0 .8 Re s tru c tu rin g re s e rv e 1 .6 0 .1 T a to o d is trib .7 .5 (0 .2 )0 .2 0 .3 0 .6 0 .9 Ro y a ltie s p a y a b le 3 .8 0 .3 a g re e me n tv a lu e 8 .1 (0 .1 )0 .2 0 .4 0 .6 1 .0 Th ird P a rty Cre d itF a c ility S T 1 4 .0 1 .0 ($ M)1 0 .0 0 .0 0 .4 0 .5 0 .8 1 .1 Du e to re la te d p a rtie s 5 .3 0 .4 1 5 .0 0 .4 0 .8 0 .9 1 .1 1 .5 Oth e rc u rre n tlia b ilitie s 0 .6 0 .0 To ta lCu rre n tlia b litie s 4 5 .2 3 .4 Du e to re la te d p a rtie s lo n g te rm3 .0 0 .2 De fe rre d in c o me lo n g te rm5 .3 0 .4 Oth e rlo n g te rmlia b ilitie s 6 .7 0 .5 To ta lNo n Cu rre n tlia b litie s 1 5 .0 1 .1 To ta llia b ilitie s 6 0 .2 4 .5 EQUITYVALUE ($ M)Offb a la n c e s h e e tite ms :S e v e ra n c e c o s ts 5 .0 0 .4 De fe rre d ta x a s s e ts v a lu e ($ M)To ta llia b ilitie s + o ffb a la n c e s h e e tlia b ilitie s 6 5 .2 4 .8 4 .8 5 1 0 1 1 1 5 2 0 5 .0 (4 .7 )0 .3 1 .7 5 .3 1 0 .3 T a to o d is trib .7 .5 (2 .2 )2 .8 4 .2 7 .8 1 2 .8 (M$ )($ /s h a re )As s e ts (re v is e d v a lu e )7 0 .0 5 .2 a g re e me n tv a lu e 8 .1 (1 .7 )3 .3 4 .88 .3 1 3 .3 L ia b ilitie s (b a la n c e s h e e tv a lu e )(6 5 .2 )(4 .8 )($ M)1 0 .0 0 .3 5 .3 6 .7 1 0 .3 1 5 .3 Va lu e o fIn c 4 .8 0 .4 1 5 .0 5 .3 1 0 .3 1 1 .7 1 5 .3 2 0 .3 (1 )1 3 ,4 7 8 ,9 2 0 o u ts ta n d in g s h a re s o P re limin a ry NAVa n a ly s is o u tlin e s a $ 5 M($ 0 .4 /s h a re )v a lu e fo rArma d illo s e q u ity ,i.e a 7 9 %d is c o u n tto th e c u rre n ts h a re p ric e ($ 1 .6 7 /s h a re )

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 14/30

    P ROJ ECT TATOOCONF IDENTIAL IIP re limin a ry v a lu a tio n ma te ria ls AVALUATIONMETHODOLOGYBNET AS S ET VALUE ANALYS IS CCOMPARABLE TRADINGMULTIP LES DMINORIT IES BUYOUT TRANSACTIONS INTHE US

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 15/30

    P ROJ ECT TATOOCONF IDENTIAL Arma d illo s Bu s in e s s P la n (a s p e rp re s e n ta tio n b y th e ma n a g e me n tto th e Bo a rd in No v e mb e r2 0 0 7 )P &L ($ M)MARKET ITEMS ($ M)As o f3 1 0 3 ,$ millio n s 2 0 0 6 A2 0 0 7 A2 0 0 8 E 2 0 0 9 E In $ millio n s Re v e n u e s 2 1 8 .7 1 2 2 .3 1 2 9 .3 1 2 0 .2 1 mo n th a v e ra g e p ric e a s o f(2 1 0 2 0 8 )1 ,3 1 $ g ro wth (%)(4 4 .1 %)5 .7 %(7 .0 %)Nu mb e ro fs h a re s (m)1 3 ,5 Gro s s Ma rg in 7 3 .4 9 .7 5 8 .1 4 0 .2 Ma rk e tc a p ita liz a tio n 1 7 ,7 ma rg in (%)3 3 .5 %4 0 .6 %4 4 .9 %3 3 .4 %Ne td e b ta t3 1 1 2 0 7 1 6 ,9 R&D(5 1 .9 )(3 0 .1 )(1 2 .5 )(2 .8 )fin a n c ia ld e b ts 2 2 ,4 c a s h &c a s h e q u iv a le n ts (5 ,4 )S e llin g &Dis trib u tio n (4 3 .0 )(2 5 .3 )(2 6 .1 )(1 9 .6 )G&A(3 0 .4 )(2 1 .8 )(1 9 .5 )(1 3 .2 )Min o rity in te re s t0 ,0 Ata ritra d e ma rk lic e n c e (3 .1 )(2 .2 )(0 .5 )(0 .4 )En te rp ris e Va lu e 3 4 ,6 EBITDA(5 5 .1 )(2 9 .7 )(0 .5 )4 .2 ma rg in (%)2 5 .2 %2 4 .3 %0 .4 %3 .5 %S o u rc e :Co mp a n y ,Da ta s tre a mD&A(5 .2 )(3 .0 )(1 .7 )(1 .3 )EBIT (6 0 .3 )(3 2 .7 )(2 .2 )2 .9 IMP L IEDMULTIP LES ma rg in (%)2 7 .6 %2 6 .7 %1 .7 %2 .4 %Ne tIn te re s t(0 .6 )0 .3 2 0 0 6 A2 0 0 7 A2 0 0 8 E 2 0 0 9 E Ex c e p tio n a ls (8 .5 )(4 8 .0 )(6 .0 )(2 .2 )EV/Re v e n u e s 0 ,1 6 x 0 ,2 8 x 0 ,2 7 x 0 ,2 9 x EBT (6 9 .4 )(8 0 .4 )(8 .2 )0 .7 T a x 0 .4 1 0 .7 (1 .0 )(1 .0 )EV/EBITDAn .mn .mn .m8 ,2 x Ne tIn c o me (6 9 .0 )(6 9 .7 )(9 .3 )(0 .3 )EV/EBIT n .mn .mn .m1 2 ,1 x ma rg in (%)3 1 .5 %5 7 .0 %7 .2 %0 .3 %P /E n .mn .mn .mn .mS o u rc e :2 0 0 7 An n u a lRe p o rt,Arma d illo e s tima te s

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 16/30

    P ROJ ECT TATOOCONF IDENTIAL Co mp a ra b le T ra d in g Mu ltip le s ENTERP RIS E VALUE /Re v e n u e s EBITDAEBIT Ad ju s te d P /E Ca l.a s o f3 1 0 3 Eq u ity (Nm)2 0 0 7 A2 0 0 8 E 2 0 0 9 E 2 0 0 7 A2 0 0 8 E 2 0 0 9 E 2 0 0 7 A2 0 0 8 E 2 0 0 9 E 2 0 0 7 A2 0 0 8 E 2 0 0 9 E Dis trib u to rs (fo rillu s tra tiv e p u rp o s e o n ly )Allia n c e Dis trib u to rs 7 0 .2 0 x n .a n .a n .mn .a n .a n .mn .a n .a n .mn .a n .a Na v a rre 4 5 0 .1 7 x 0 .1 8 x 0 .1 6 x 4 .2 x 3 .3 x 3 .1 x 6 .8 x 4 .8 x 4 .4 x 1 6 .3 x 7 .8 x 6 .6 x MEAN0 .1 9 x 0 .1 8 x 0 .1 6 x 4 .2 x 3 .3 x 3 .1 x 6 .8 x 4 .8 x 4 .4 x 1 6 .3 x 7 .8 x 6 .6 x Ata ri1 3 0 .3 0 x 0 .2 8 x 0 .3 1 x n .mn .m8 .7 x n .mn .m1 2 .8 x n .mn .m&n b s p n .mP u b lis h e rs &Dis trib u to rs S CiEn te rta in me n t4 5 0 .2 2 x 0 .2 2 x 0 .1 4 x 1 .3 x 1 .3 x 0 .4 x n .m.n .m.7 .1 x n .m.n .m.n .m.Mid wa y 1 3 2 1 .5 8 x 1 .4 8 x n .a n .m.n .m.n .a n .m.n .m.n .a n .m.n .m.n .a T a k e two 9 4 0 1 .3 1 x 1 .1 8 x 0 .9 5 x n .m.1 3 .8 x 6 .6 x n .m.n .m.2 1 .6 x n .m.n .m.3 0 .5 x Ca p c o m1 ,2 0 5 2 .4 1 x 2 .2 4 x 1 .9 1 x 1 4 .5 x 1 3 .8 x 1 0 .6 x 1 8 .7 x 1 7 .9 x 1 2 .8 x 3 2 .6 x 3 1 .7 x 2 1 .2 x MEAN1 .3 8 x 1 .2 8 x 1 .0 0 x 7 .9 x 9 .6 x 5 .9 x 1 8 .7 x 1 7 .9 x 1 3 .9 x 3 2 .6 x 3 1 .7 x 2 5 .8 x No te :Na v a rre d is trib u tio n re v e n u e s re p re s e n ts 8 4 %o fto ta lre v e n u e s Ma rk e tc a p ita liz a tio n is b a s e d o n 1 mo n th a v e ra g e s h a re p ric e a s o f2 9 0 2 0 8 o Ap e e rs g ro u p limite d to o n ly two d is trib u tio n o rie n te d US c o mp a ra b le s h a s b e e n id e n tifie d

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 17/30

    P ROJ ECT TATOOCONF IDENTIAL Co mp a ra b le T ra d in g Mu ltip le s ENTERP RIS E VALUE /Re v e n u e s EBITDAEBIT Ad ju s te d P /E Ca l.a s o f3 1 0 3 Eq u ity (Nm)2 0 0 7 A2 0 0 8 E 2 0 0 9 E 2 0 0 7 A2 0 0 8 E 2 0 0 9 E 2 0 0 7 A2 0 0 8 E 2 0 0 9 E 2 0 0 7 A2 0 0 8 E 2 0 0 9 E Dis trib u to rs (fo rillu s tra tiv e p u rp o s e o n ly )Allia n c e Dis trib u to rs 7 0 .2 0 x n .a n .a n .mn .a n .a n .mn .a n .a n .mn .a n .a Na v a rre 4 5 0 .1 7 x 0 .1 8 x 0 .1 6 x 4 .2 x 3 .3 x 3 .1 x 6 .8 x 4 .8 x 4 .4 x 1 6 .3 x 7 .8 x 6 .6 x MEAN0 .1 9 x 0 .1 8 x 0 .1 6 x 4 .2 x 3 .3 x 3 .1 x 6 .8 x 4 .8 x 4 .4 x 1 6 .3 x 7 .8 x 6 .6 x Ata ri1 3 0 .3 0 x 0 .2 8 x 0 .3 1 x n .mn .m8 .7 x n .mn .m1 2 .8 x n .mn .m&n b s p n .mP u b lis h e rs &Dis trib u to rs S CiEn te rta in me n t4 5 0 .2 2 x 0 .2 2 x 0 .1 4 x 1 .3 x 1 .3 x 0 .4 x n .m.n .m.7 .1 x n .m.n .m.n .m.Mid wa y 1 3 2 1 .5 8 x 1 .4 8 x n .a n .m.n .m.n .a n .m.n .m.n .a n .m.n .m.n .a T a k e two 9 4 0 1 .3 1 x 1 .1 8 x 0 .9 5 x n .m.1 3 .8 x 6 .6 x n .m.n .m.2 1 .6 x n .m.n .m.3 0 .5 x Ca p c o m1 ,2 0 5 2 .4 1 x 2 .2 4 x 1 .9 1 x 1 4 .5 x 1 3 .8 x 1 0 .6 x 1 8 .7 x 1 7 .9 x 1 2 .8 x 3 2 .6 x 3 1 .7 x 2 1 .2 x MEAN1 .3 8 x 1 .2 8 x 1 .0 0 x 7 .9 x 9 .6 x 5 .9 x 1 8 .7 x 1 7 .9 x 1 3 .9 x 3 2 .6 x 3 1 .7 x 2 5 .8 x No te :Na v a rre d is trib u tio n re v e n u e s re p re s e n ts 8 4 %o fto ta lre v e n u e s Ma rk e tc a p ita liz a tio n is b a s e d o n 1 mo n th a v e ra g e s h a re p ric e a s o f2 9 0 2 0 8 o Ap e e rs g ro u p limite d to o n ly two d is trib u tio n o rie n te d US c o mp a ra b le s h a s b e e n id e n tifie d

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 18/30

    P ROJ ECT TATOOCONF IDENTIAL IIP re limin a ry v a lu a tio n ma te ria ls AVALUATIONMETHODOLOGYBNET AS S ET VALUE ANALYS IS CCOMPARABLE TRADINGMULTIP LES DMINORIT IES BUYOUT TRANSACTIONS INTHE US

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 19/30

    P ROJ ECT TATOOCONF IDENTIAL An a ly s is o fMin o ritie s Bu y o u tT ra n s a c tio n s in th e US o v e rth e la s t3 y e a rs Ac q u ire rDa te o fs ta k e p o s tEq u ity Offe re d a n n o u n c e me n tT a rg e tAc q u iro r%a c q u ire d te n d e rVa lu e ($ M)p re miu m1 2 No v 0 7 Ca g le s In c Ex is tin g Ma n a g e me n t3 6 %1 0 0 %4 0 2 2 %2 3 Oc t0 7 Wa s te In d u s trie s US AIn c Ma c q u a rie IP Go ld ma n S a c h s 4 9 %1 0 0 %5 1 4 2 9 %1 7 J u l0 7 Alfa Co rp Alfa Mu tu a lIn s u ra n c e Co 4 5 %1 0 0 %1 ,7 6 0 1 6 %2 3 F e b 2 0 0 7 Gre a tAme ric a n F in a n c ia lRe s o u rc e s In c Ame ric a n F in a n c ia lGro u p In c 1 9 %1 0 0 %1 ,1 0 5 1 2 %2 4 J a n 0 7 2 1 s tCe n tu ry In s u ra n c e Gro u p Ame ric a n In te rn a tio n a lGro u p 3 9 %1 0 0 %1 ,8 4 7 2 8 %2 0 No v 0 6 TDBa n k n o rth In c TDBa n k F in a n c ia lGro u p 4 2 %1 0 0 %7 ,6 0 3 0 %2 1 S e p 0 6 S p o rtS u p p ly Gro u p In c Co lle g ia te P a c ific In c 2 7 %1 0 0 %9 0 1 5 %1 0 Oc t0 6 Ne tRa tin g s VNUGro u p BV4 0 %1 0 0 %5 7 1 1 0 %2 0 Ma r0 6 LUKo ilOAOCh a p a rra lRe s o u rc e s In c 4 0 %1 0 0 %2 2 2 1 3 %6 F e b 0 6 L a fa rg e No rth Ame ric a In c L a fa rg e S A4 7 %1 0 0 %6 ,2 9 5 1 7 %1 3 De c 0 5 Virb a c Co rp Virb a c S A4 0 %1 0 0 %9 3 1 3 %9 De c 0 5 S wis h e rIn te rn a tio n a lIn c HBF a irv ie wHo ld in g s 3 3 %1 0 0 %1 5 2 %1 8 J u l0 5 Bla c k Ro c k Ac q u is itio n Co rp Ob s id ia n En te rp ris e s In c 2 3 %1 0 0 %6 5 %2 5 Ma r0 5 Ve s tin Gro u p In c Ma n a g e me n tGro u p (Mic h a e lS h u s te k )1 9 %1 0 0 %7 2 %2 1 F e b 0 5 Eo n L a b s In c No v a rtis AG3 5 %1 0 0 %2 ,8 5 8 1 8 %1 8 J a n 0 5 Un ite d Glo b a lCo mIn c L ib e rty Me d ia In te rn a tio n a lIn c 4 7 %1 0 0 %7 ,5 9 6 3 %1 4 S e p 0 4 Ra g S h o p s In c S u n Ca p ita lP a rtn e rs In c 4 4 %1 0 0 %2 1 1 %1 S e p 0 4 S o u th e rn S e c u rity L ife In s u ra n c e S e c u rity Na tio n a lF in a n c ia lCo rp 2 3 %1 0 0 %8 1 4 %2 Au g 0 4 Co x Co mmu n ic a tio n s In c Co x En te rp ris e s In c 3 8 %1 0 0 %2 0 ,2 1 3 1 6 %2 5 J u n 0 4 Ed e lb ro c k Co rp Ma n a g e me n tGro u p 4 9 %1 0 0 %9 2 2 3 %MEAN1 3 %MEDIAN1 4 %MIN0 %S o u rc e :De a lo g ic MAX2 9 %o An a ly s is o ftra n s a c tio n s in v o lv in g min o ritie s b u y o u tin th e US o v e rth e la s ty e a rs o u tlin e s a n a v e ra g e p re miu mo fa ro u n d + 1 3 %o v e rla s ttra d in g p ric e b e fo re a n n o u n c e me n to Th e a p p lic a tio n o fth is a v e ra g e p re miu mto Arma d illo s la s tc lo s in g p ric e ($ 1 .6 7 /s h a re a s o f2 9 0 2 0 8 )o u tlin e s a v a lu e p e rs h a re o fa ro u n d $ 1 .8 9

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 20/30

    P ROJ ECT TATOOCONF IDENTIAL IIIKe y le g a l&ta x is s u e s to b e c le a re d in o rd e rto a s s e s s th e Arma d illo s itu a tio n (Mo rris o n &F o e rs te ra n a ly s is )

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 21/30

    P ROJ ECT TATOOCONF IDENTIAL Ke y le g a lis s u e s o Mo rris o n &F o e rs te rh a s c o n d u c te d a s e p a ra te a n a ly s is c o v e rin g in te ra lia th e fo llo win g to p ic s :o P o te n tia lc h a n g e o fc o n tro lc la u s e o rs imila rme c h a n is ms lik e ly to b e trig g e re d in th e s u b lic e n s e a g re e me n ts b e twe e n F u n ima tio n a n d a rma d illo o P o te n tia lc o n s e q u e n c e s o fth e p riv a te p la c e me n ta g re e me n twith Co g h illo P o te n tia lc o n s e q u e n c e s o fa c h a n g e o fo wn e rs h ip o n e x is tin g NOLs a tArma d illo s le v e lo S ta tu s o fArma d illo s c u rre n tfin a n c in g

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 22/30

    P ROJ ECT TATOOCONF IDENTIAL Ap p e n d ix AVALUATIONOF DEF ERREDTAXAS S ETS BVALUATIONOF TATOODEVELOPMENT AGREEMENT CTRADINGCOMPARABLES S HORT P ROF ILES

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 23/30

    P ROJ ECT TATOOCONF IDENTIAL

    Va lu a tio n o fDe fe rre d T a x As s e ts o n a g o in g c o n c e rn b a s is b u tc o mb in e d ith T a to o o p e ra tio n s [th e o re tic a lwa n a ly s is ]

    o Me th o d o lo g y a s p e rc o n v e rs a tio n with T a to o 0 5 P ro fitBe fo re T a x :2 0 0 9 E :$ 0 .7 M2 0 1 0 E :$ 6 .0 M0 5 Ta x ra te :4 0 .0 %0 5 Dis c o u n tra te :1 5 %(in lin e with p ric in g a s s u mp tio n s re ta in e d fo rT a to o s Ora n e is s u e )0 5 1 OLs b a s is Nu n c h a n g e d

    DIS COUNTEDTAXGAINS ($ M)

    In $ M2 0 0 9 E 2 0 1 0 E 2 0 1 1 E 2 0 1 2 E 2 0 1 3 E 2 0 1 4 E 2 0 1 5 E 2 0 1 6 E 2 0 1 7 E 2 0 1 8 E 2 0 1 9 E 2 0 2 0 E2 0 2 1 E 2 0 2 2 E 2 0 2 3 E 2 0 2 4 E 2 0 2 5 E 2 0 2 6 E 2 0 2 7 E 2 0 2 8 E

    P ro fitb e fo re ta x 0 ,7 6 ,0 9 ,0 1 ,8 2 ,7 3 ,8 4 ,9 5 ,9 6 ,5 6 ,8 7 ,2 7 ,5 7 ,9 8 ,3 8 ,7 9 ,1 9 ,6 1 0 ,1 1 0 ,6 1 1 ,1 g ro wth (%)5 0 %(8 0 %)5 0 %4 0 %3 0 %2 0 %1 0 %5 %5 %5 %5 %5 %5 %5 %5 %5 %5 %5 %

    Ta x g a in 0 ,3 2 ,4 3 ,6 0 ,7 1 ,1 1 ,5 2 ,0 2 ,4 2 ,6 2 ,7 2 ,9 3 ,0 3 ,2 3 ,3 3 ,5 3 ,7 3 ,8 4 ,0 4 ,2 4 ,4 ta x ra te (%)4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %4 0 ,0 %

    Dis c o u n te d Va lu e 1 1 ,5 Dis c o u n tra te 1 5 %

    P re s e n tVa lu e o fT a x Ga in s

    WACC1 1 ,5 1 1 ,0 %1 3 ,0 %1 5 ,0 %1 7 ,0 %1 9 ,0 %4 1 0 ,8 9 ,1 7 ,7 6 ,6 5 ,8 5 1 3 ,4 1 1 ,3 9 ,6 8 ,2 7 ,1 P BT 6 1 6 ,1 1 3 ,5 1 1 ,5 9 ,8 8 ,5 ($ M)7 1 8 ,7 1 5 ,7 1 3 ,3 1 1 ,4 9 ,9 8 2 1 ,4 1 7 ,9 1 5 ,2 1 3 ,0 1 1 ,3

    S o u rc e :T a to o e s tima te s

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 24/30

    P ROJ ECT TATOOCONF IDENTIAL Ap p e n d ix AVALUATIONOF DEF ERREDTAXAS S ETS BVALUATIONOF TATOODIS TRIBUTIONAGREEMENT CTRADINGCOMPARABLES S HORT P ROF ILES

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 25/30

    P ROJ ECT TATOOCONF IDENTIAL Va lu a tio n o fT a to o Dis trib u tio n Ag re e me n to Me th o d o lo g y a s p e rc o n v e rs a tio n with T a to o o Dis trib u tio n re v e n u e s :$ 8 0 Mo Ag re e me n tv ia b le u p to 2 0 1 0 E o Arma d illo s ma rg in :3 0 %o fre v e n u e s o Arma d illo s e x p e n s e s :8 0 %o fma rg in o Dis c o u n tra te :1 5 %(in lin e with p ric in g a s s u mp tio n s re ta in e d fo rT a to o s Ora n e is s u e )DIS COUNTEDCASHF LOWS ($ M)In $ M2 0 0 8 E 2 0 0 9 E 2 0 1 0 E Re v e n u e s 8 0 1 0 0 1 2 0 g ro wth (%)2 5 ,0 %2 0 ,0 %a s %o fto ta lre v e n u e s 6 2 %8 3 %n .a Ata ris Ma rg in 2 4 3 0 3 6 ma rg in (%)3 0 ,0 %3 0 ,0 %3 0 ,0 %Ata ris e x p e n s e s (1 9 )(2 4 )(2 9 )in %o fma rg in (%)8 0 ,0 %8 0 ,0 %8 0 ,0 %P ro fitb e fo re ta x 5 6 7 T a x (2 )(2 )(3 )ta x ra te (%)4 0 ,0 %4 0 ,0 %4 0 ,0 %F re e Ca s h F lo ws 3 4 4 WACC1 1 ,0 %1 3 ,0 %1 5 ,0 %1 7 ,0 %1 9 ,0 %Va lu e 8 ,7 8 ,4 8 ,1 7 ,8 7 ,5 S o u rc e :T a to o e s tima te s

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 26/30

    P ROJ ECT TATOOCONF IDENTIAL Ap p e n d ix AVALUATIONOF DEF ERREDTAXAS S ETS BVALUATIONOF TATOODIS TRIBUTIONAGREEMENT CTRADINGCOMPARABLES S HORT P ROF ILES

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 27/30

    P ROJ ECT TATOOCONF IDENTIAL Na v a rre Bu s in e s s o v e rv ie wBUS INES S DES CRIP T IONMAJ ORP RODUCTS ANDS ERVICES o Na v a rre is a d is trib u to r(8 4 %o fre v e n u e s )a n d p u b lis h e r(1 6 %o fP RODUCTS &S ERVICES BRANDS re v e n u e s )o fp h y s ic a la n d d ig ita lh o me e n te rta in me n ta n d mu ltime d ia o Co mp u te rg a me s o En c o re :En c o re p u b lis h e s title s in th e e d u c a tio n ,p ro d u c ts ,in c lu d in g P Cs o ftwa re ,CDa u d io ,DVDv id e o ,v id e o g a me s a n d p ro d u c tiv ity ,k id s a n d g a me s s o ftwa re c a te g o rie s o En te rta in me n ts o ftwa re a c c e s s o rie s o DVDv id e o o BCI:BCIis a d e v e lo p e r,lic e n s o r,p a c k a g e ra n d o S in c e in c e p tio n in 1 9 8 3 ,th e c o mp a n y e s ta b lis h e d d is trib u tio n re la tio n s h ip s ma rk e te ro fe n te rta in me n tv id e o a n d a u d io o CDa u d io with ma jo rre ta ile rs in c lu d in g Be s tBu y ,Wa lMa rt/S a ms Clu b ,Circ u itp ro d u c ts City ,S ta p le s a n d Co s tc o ,a n d h a v e h is to ric a lly d is trib u te d to o v e r1 9 ,0 0 0 o F u n ima tio n :F UNima tio n is th e le a d in g c o n te n tre ta ila n d d is trib u tio n c e n tre lo c a tio n s th ro u g h o u tth e Un ite d S ta te s a n d p ro v id e rin th e Un ite d S ta te s ma rk e tfo ra n ime ,Ca n a d a wh ic h itlic e n s e s fro mJ a p a n e s e rig h ts h o ld e rs ,a n d o His to ric a lly ,Na v a rre s b u s in e s s h a s fo c u s e d o n p ro v id in g d is trib u tio n tra n s la te s a n d a d a p ts th e c o n te n tfo rte le v is io n s e rv ic e s fo rth ird p a rty v e n d o rs .Ov e rth e p a s ts e v e ra ly e a rs ,th e c o mp a n y p ro g ra mmin g a n d h o me v id e o s h a v e e x p a n d e d its b u s in e s s to in c lu d e th e lic e n s in g a n d p u b lis h in g o fh o me S o u rc e :Co mp a n y e n te rta in me n ta n d mu ltime d ia s o ftwa re c o n te n t,p rima rily th ro u g h th e a c q u is itio n s o fs o ftwa re p u b lis h e rs in s e le c te d ma rk e ts S TRATEGYo T h ro u g h its d is trib u tio n b u s in e s s ,Na v a rre d is trib u te s g o o d s th a ta re o Ac q u is itio n s o fAttra c tiv e Co n te n t:Ex p a n d its p u b lis h in g b u s in e s s p ro v id e d b y P Cs o ftwa re a n d v id e o g a me p u b lis h e rs a n d d e v e lo p e rs ,th ro u g h th e a c q u is itio n o rlic e n s in g o fwe lle s ta b lis h e d title s o ro th e rin d e p e n d e n tmu s ic la b e ls ,ma jo rmu s ic la b e ls ,a n d in d e p e n d e n ta n d ma jo ra ttra c tiv e c o n te n tmo tio n p ic tu re s tu d io s o Dis trib u te a Bro a d e rRa n g e a n d L a rg e rVo lu me o fP ro d u c ts :o Th ro u g h its p u b lis h in g b u s in e s s ,wh ic h g e n e ra lly h a s h ig h e rg ro s s Dis trib u te a b ro a d e rra n g e a n d la rg e rv o lu me o fh o me e n te rta in me n ta n d ma rg in s th a n its d is trib u tio n b u s in e s s ,th e c o mp a n y o wn s o rlic e n s e s mu ltime d ia p ro d u c ts to its re ta ilc u s to me rs b y p ro v id in g a b ro a d s e le c tio n v a rio u s P Cs o ftwa re ,CDa u d io a n d DVDv id e o title s o fp ro d u c ts a n d c a p ita liz in g o n its c u s to me rre la tio n s h ip s o On Ma y 3 1 ,2 0 0 7 ,th e Co mp a n y a n n o u n c e d th a tith a s e n te re d in to a n o In te g ra tin g T e c h n o lo g y a n d S y s te ms with Re ta ile rs :En h a n c e th e lin k a g re e me n tto s e llits in d e p e n d e n tmu s ic d is trib u tio n b u s in e s s ,Na v a rre in th e s u p p ly c h a in b e twe e n th e c o mp a n y a n d its v e n d o rs a n d re ta ilEn te rta in me n tMe d ia ,In c .( NEM ),to KOCHEn te rta in me n tfo r$ 6 .5 c u s to me rs millio n in c a s h o P ro v id in g Va lu e Ad d e d S e rv ic e s S o u rc e :Co mp a n y S o u rc e :Co mp a n y

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 28/30

    Na v a rre Ke y F in a n c ia ls P &L ITEMS (IN$ M)MARKET ITEMS (IN$ M)As o f3 1 0 3 ,$ millio n s 2 0 0 7 A2 0 0 8 E 2 0 0 9 E In $ millio n s ($ m)Re v e n u e s 6 9 8 .4 6 7 2 .0 7 1 5 .7 1 mo n th a v e ra g e p ric e 1 .7 9 $ g ro wth (%)Nu mb e ro fs h a re s (m)3 6 .2 Ma rk e tc a p ita lis a tio n 6 4 .7 Gro s s Ma rg in 1 1 6 .7 1 1 2 .9 1 2 1 .7 Ne td e b ta t3 0 0 9 0 7 5 1 .6 ma rg in (%)1 6 .7 %1 6 .8 %1 7 .0 %fin a n c ia ld e b ts 5 3 .0 c a s h &c a s h e q u iv a le n ts (1 .4 )S e llin g &Dis trib u tio n (4 1 .1 )(3 7 .4 )(4 1 .0 )G&A(4 3 .7 )(4 0 .1 )(4 3 .0 )Min o rity in te re s t0 .0 Oth e rs (3 .7 )(0 .1 )(0 .1 )En te rp ris e Va lu e 1 1 6 .3 EBITDA2 8 .3 3 5 .3 3 7 .6 ma rg in (%)4 .0 %5 .3 %5 .3 %S o u rc e :Da ta s tre a ma s o f2 1 /0 2 /2 0 0 8 D&A(1 1 .0 )(1 1 .0 )(1 1 .0 )EBIT 1 7 .3 2 4 .3 2 6 .6 ma rg in (%)2 .5 %3 .6 %3 .7 %IMP L IEDMULTIP LES Ne tIn te re s t(9 .9 )(6 .6 )(6 .0 )2 0 0 7 A2 0 0 8 E 2 0 0 9 E Oth e rs (0 .5 )0 .2 EV/Re v e n u e s 0 .1 7 x 0 .1 7 x 0 .1 6 x EBT 6 .9 1 7 .9 2 0 .6 EV/EBITDA4 .1 x 3 .3 x 3 .1 x T a x (2 .9 )(9 .5 )(1 0 .6 )Ne tIn c o me 4 .1 8 .4 1 0 .0 EV/EBIT 6 .7 x 4 .8 x 4 .4 x ma rg in (%)0 .6 %1 .3 %1 .4 %P /E 1 5 .9 x 7 .7 x 6 .4 x S o u rc e :2 0 0 7 An n u a lRe p o rt,Bro k e rs

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 29/30

    P ROJ ECT TATOOCONF IDENTIAL Allia n c e Dis trib u to rs Bu s in e s s o v e rv ie wBUS INES S DES CRIP T IONBOARD&MANAGEMENT Allia n c e Dis trib u to rs Ho ld in g In c .is a le a d in g wh o le s a le d is trib u to ro fMa n a g e me n tT ITLE o v id e o g a me c o n s o le s a n d v id e o g a me p e rip h e ra ls ,a c c e s s o rie s a n d s o ftwa re Hu mb e rtB.P o we ll,IIICh ie fEx e c u tiv e Offic e ro T h e c o mp a n y h a s a d ire c tre la tio n s h ip with S o n y a n d a ls o a d ire c tAn d re Mu lle rCh ie fOp e ra tin g Offic e rd is trib u to rs fo ra p p ro x ima te ly 7 5 th ird p a rty v e n d o rs (in c lu d in g E le c tro n ic Arts In c .,T a k e Two In te ra c tiv e S o ftwa re ,In c .a n d THQIn c .)o fS te p h e n Ag re s s Ch ie fF in a n c ia lOffic e ra c c e s s o rie s a n d s o ftwa re fo rv id e o g a me s Bo a rd T ITLE o Allia n c e s in v e n to ry is o n e o fth e la rg e s tin th e v id e o g a me in d u s try with J a y Ge lma n Ch a irma n o v e r5 0 0 0 title s o In S e p te mb e r2 0 0 6 ,Allia n c e Dis trib u to rs a c q u ire d F o tp E le c tric S u p p ly ,a An d re Mu lle rDire c to ro fth e Bo a rd US b a s e d d is trib u to ro fc o n s u me re le c tro n ic s ,fo r$ 7 5 mS te v e n H.Na th a n Bo a rd Me mb e ro Allia n c e Dis trib u to rs o n ly o p e ra te s in No rth Ame ric a Th o ma s Vitie llo Bo a rd Me mb e rS o u rc e :Co mp a n yS o u rc e :Co mp a n y S HAREHOLDERS S HARE P RICE S h a re P ric e (in $ )Vo lu me (in th d )J a y Ge lma n Oth e rs 0 .4 0 3 ,5 0 0 2 8 .5 %3 4 .1 %0 .3 5 8 2 .0 %3 ,0 0 0 0 .3 0 2 ,5 0 0 0 .2 5 2 ,0 0 0 S TGS tra te g y 0 .2 0 1 ,5 0 0 P a rtn e rs 0 .1 5 1 ,0 0 0 1 7 .6 %0 .1 0 5 .3 %F ra n c is 0 .0 5 5 0 0 Ve g lia n te J a me s S .0 .0 0 8 .6 %Co rfma n J a n 0 7 Ma r0 7 Ma y 0 7 J u l0 7 S e p 0 7 No v 0 7 J a n 0 8 1 1 .2 %Vo lu me Allia n c e Dis trib u to rs (0 0 0 )Allia n c e Dis trib u to rs ($ )Na s d a q 1 0 0 re b a s e d S o u rc e :L io n s h a re S o u rc e :Da ta s tre a m2 8

  • 5/13/2015 EX99(c)(3)

    http://www.sec.gov/Archives/edgar/data/1002607/000095012308008807/e60672a1exv99wcw3.htm 30/30

    Allia n c e Dis trib u to rs Ke y F in a n c ia ls P &L ITEMS (IN$ M)MARKET ITEMS (IN$ M)As o f3 1 1 2 ,$ millio n s 2 0 0 5 A2 0 0 6 AIn $ millio n s ($ m)Re v e n u e s 5 8 .7 7 0 .3 1 mo n th a v e ra g e p ric e 0 .2 1 $ g ro wth (%)1 9 .9 %Nu mb e ro fs h a re s (m)4 9 .0 Ma rk e tc a p ita lis a tio n 1 0 Gro s s Ma rg in 5 .9 6 .9 ma rg in (%)1 0 .1 %9 .8 %Ne td e b ta t3 0 0 6 0 7 4 fin a n c ia ld e b ts 5 S G&A(5 .2 )(6 .2 )c a s h &c a s h e q u iv a le n ts (0 )EBITDA0 .7 0 .7 Min o rity in te re s tma rg in (%)1 .3 %1 .0 %En te rp ris e Va lu e 1 5 D&A(0 .1 )(0 .1 )EBIT 0 .6 0 .5 ma rg in (%)1 .1 %0 .8 %S o u rc e :Da ta s tre a ma s o f2 1 /0 2 /2 0 0 8 Ne tIn te re s t(0 .5 )(0 .8 )EBT 0 .1 (0 .3 )T a x 0 .1 0 .0 IMP L IEDMULTIP LES Ne tIn c o me 0 .2 (0 .2 )ma rg in (%)0 .3 %0 .3 %2 0 0 5 A2 0 0 6 AMin o rity In te re s tEV/Re v e n u e s 0 ,2 5 x 0 ,2 1 x Ne tIn c o me g rp s h a re 0 .2 (0 .2 )ma rg in (%)0 .3 %0 .3 %EV/EBITDAn .m.n .m.EV/COIn .m.n .m.P /En .m.n .m.S o u rc e :2 0 0 7 An n u a lRe p o rt